The Path to Mainstream Finance: Exploring Complementary Currencies and Interest-Free Lending

This paper explores elements of alternative finance including complementary currencies, credit clearing systems, and Islamic Banking practices. I begin first by outlining the issues created by the mainstream western banking model, including wealth inequality, socioeconomic discrimination, environmental degradation, and the collapse of small businesses and local economies. I go on to introduce and define the concepts of complementary currencies, Local Exchange Trading Systems, and credit clearing systems; I argue that these systems challenge the popularly held perceptions that currencies and mainstream banking practices in general are immutable, given, or ideal. To support this assertion, I transition into my research findings first by describing the research methods and experiences that have led me to hold these beliefs. I recount the details of a 5-week internship with Geneva-based complementary currency association Monnaie Léman, where I gained valuable exposure to concepts and structures associated with this field. Finally, I discuss my research findings as related to both complementary currencies and interest-free lending in credit clearing systems. I argue that among the greatest barriers in the way of success for such systems is publicity and public trust. I go on to argue that interest-free lending has proven to succeed through credit clearing systems as well as in Islamic Banking and should therefore be explored further. This paper as a whole serves to inform on the subject and encourage the inclusion of alternative financial systems, primarily complementary currencies and interest-free lending.